The US Chamber of Commerce claimed that a California law, Assembly Bill 1889 (AB 1889), was preempted by the National Labor Relations Act of 1935.

This prohibited employers that receive state funds “to assist, promote, or deter union organizing.”[1] Attorney General of California Jerry Brown defended the case.

Seven judges on the Supreme Court held that California was preempted from passing a law prohibiting any recipient of state funds either from using money to promote or deter union organizing efforts.

As the statute’s preamble candidly acknowledges, the legislative purpose is not the efficient procurement of goods and services, but the furtherance of a labor policy.

In contrast to a neutral affirmative requirement that funds be spent solely for the purposes of the relevant grant or program, AB 1889 imposes a targeted negative restriction on employer speech about unionization.

As explained below, AB 1889 couples its “use” restriction with compliance costs and litigation risks that are calculated to make union-related advocacy prohibitively expensive for employers that receive state funds.

By making it exceedingly difficult for employers to demonstrate that they have not used state funds and by imposing punitive sanctions for noncompliance, AB 1889 effectively reaches beyond “the use of funds over which California maintains a sovereign interest.” Brief for State Respondents 19....Justices Stephen Breyer and Ruth Bader Ginsburg dissented because the law was simply neutral to the bargaining process.

The majority finds these provisions pre-empted because in its view the sections regulate employer speech in a manner that weakens, or undercuts, a congressional policy, embodied in NLRA §8(c), “ ‘to encourage free debate on issues dividing labor and management.’ ” Ante, at 6–7 (citing Linn v. Plant Guard Workers, 383 U. S. 53, 62 (1966)).

of Industry v. Gould Inc., 475 U. S. 282, the Court considered a Wisconsin statute that prohibited the State from doing business with firms that repeatedly violated the NLRA.

The Court said that the statute’s “manifest purpose and inevitable effect” was “to enforce” the NLRA’s requirements, which “role Congress reserved exclusively for the [National Labor Relations Board].” Id., at 291.

Second, California’s operative language does not weaken or undercut Congress’ policy of “encourag[ing] free debate on issues dividing labor and management.” Linn, supra, at 62.

Far more likely, Congress thought that directing government funds away from labor-related activity was consistent, not inconsistent, with, the policy of “encourag[ing] free debate” embedded in its labor statutes.